Ask Us: Why are deposits required by Huntsville Utilities so high?

Q: When I first moved to Huntsville, I was unpleasantly surprised to learn Huntsville Utilities charges a $300 deposit, plus a $60 non-refundable connection fee. I thought it was outrageous. After a stint with a roommate (where the utilities weren't in my name), I moved back into an apartment and was required to pay the $300 fee again, even though I'd had perfect payment history for the nearly two years I'd previously had Huntsville Utilities in my name. I also had to pay the $60 fee again, even though I've moved into an apartment that already had services connected. I've lived in other cities and states and never seen such outrageous fees. Why do they require so much money and what is it used for? It seems too high.

A: Huntsville Utilities is a not-for-profit public utility, said Bill Yell, communications director for Huntsville Utilities. A security deposit is required by the City of Huntsville, he said, which is currently $300 plus a $60 non-refundable service fee.

"The deposit is collected as security for a customer's final bill," Yell said. "The service fee not only covers the cost of a utility service representative making a trip to the location to obtain meter readings, but also covers administrative costs to establish the new utility account."

Yell said the intent of the deposit is to protect the rates of customers who pay their bills.

"Every dollar uncollected from one customer must be made up by the other customers," he said.

Yell added that besides electricity, natural gas and water services, Huntsville Utilities is the billing agent for the city's sewer and garbage services. "Because all of these services are billed after use, the failure to pay by customers can create a level of risk for the providers of these services to meet their financial obligations," he said.

Customers can pay a lesser deposit of $100 if they have a co-signer or by providing Huntsville Utilities a qualifying letter of good credit from their most recent utility company, Yell said, but the previous service must have ended within the last 12 months.

Yell said a customer can also pay $100 if they've had an account with Huntsville Utilities for three consecutive years within the last five years and had a good payment history.

"Upon closing the account, the security deposit is applied toward the final bill and a refund check issued for the difference if applicable," he said.

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